Crossing Our Desk:

-Could Mt. Gox actually come back from the dead? That’s the plan proposed by a group of high-profile bitcoin investors. And it’s all laid out in documents seen by The Wall Street Journal where they seek the approval of a Japanese court to revive the bankrupt and much-maligned digital-currency exchange.

The names behind the consortium aren’t that well known outside of virtual-currency circles, but they constitute big shots in the bitcoin world: Brock Pierce, CEO of GoCoin, venture capitalists Matthew Roszak of SilkRoad Equity and William Quigley of Clearstone Venture Partners. With John Betts, a former maven of electronic trading at Morgan Stanley and Goldman Sachs, at the helm of a revived exchange, their plan is to trade back to profitability and funnel half of the transaction fees back to customers who were burned by the exchange’s collapse in February.

There are no guarantees the court will agree to this plan. One hurdle is the price. The group is offering a token one bitcoin payment, according to people familiar with the plan. But then again, as the same people point out, there’s an “information vaccum” at Mt. Gox. How, exactly, would anyone put a price on its balance sheet?

In fact, from a normal, bricks-and-mortar investor’s perspective, it’s hard to see why anyone would take this project on at all. The group is taking on the whole enterprise, complete with a responsibility to try to repay the customers, who despite the discovery of 200,000 bitcoins last month still have no idea where 550,000 of their bitcoins (worth $212 million) are. Why would you take that on and take charge of a toxic brand?

The answer: because bitcoin as a whole may need it. Mt. Gox was a disaster for bitcoin’s reputation– especially because many of those who got burned were latecomers to the industry, the kind of folks that the early enthusiasts are counting on to drive the virtual currency’s expansion. Righting Mt. Gox’s wrongs is seen by some as critical to restoring lost trust.

Here’s how one person familiar with the plan put it: “If it can be fixed in this way, we all stand to benefit as the bitcoin community. If it isn’t, [the Mt. Gox collapse] has probably set bitcoin back a year or more.”

In this way, the bitcoin community is different from the dog-eat-dog world of more established industries. Because every bitcoin businessman has a stake in advancing the virtual currency’s future adoption, many will adopt investment positions that leave money on the table or in some small way benefit their competitors.

Similar motivations drive many bitcoiners, dogecoiners and other virtual-currency enthusiasts to generously hand out donations to charity. Bitcoin philanthropists are well-meaning but they’re also self-interested. Spreading bitcoin helps to spread the word, build the buzz, increase adoption and, in theory, drive up the price. They make the pie grow so that everyone’s piece is bigger.

Whether this same communitarian mindset lives on if and when bitcoin becomes established in the financial system remains to be seen. By then, the pie may have stopped growing, leaving everyone to fight over a bigger piece.

But for now, though, in the crazy Bizzarro World of the early bitcoin era, reviving Mt. Gox is a crazy plan that just might work. Whether Messrs. Pierce, Roszak, Quigley and Betts can convince a bricks-and-mortar Japanese court of that is a different matter. (Michael Casey)

“We expect it to happen, but it hasn’t happened yet.” Until the exchange is told something directly, Mr. Lee said, it plans to keep operating normally. Even once the expected notices do arrive, Mr. Lee said it won’t mean the end of his business, albeit it won’t help.

“As it turns out, running a bitcoin exchange is quite complicated,” he said. It’s even more complicated in China, where the People’s Bank of China is apparently using backdoor-channels to block bitcoin. Mr. Lee called them “secret rules.” While the banks appear banned from handling any bitcoin-denominated business like transactional services, the currency remains legal, Mr. Lee said, and the banks can still maintain relationships with the exchanges themselves.

He noted that if he had to, he could accept actual, physical cash from customers. So, it’s complicated. Still, the developments have taken a bite out of his business, which surged in the fall when it appeared the government would embrace digital currencies. Now, he said, they’re basically back to where they were in August. (Paul Vigna)